2014: Markets much too hot on Indian reform.

Consensus said:

Investors excited about Modi's reform agenda.

We said:

We are sceptical of the view that a Modi-led government would bring about India’s Margaret Thatcher moment. As we have argued elsewhere, the Congress Party model of gradual reform with a generous dose of welfare spending is firmly entrenched in India’s political economy. We think it unlikely that a mass party such as the BJP could change direction without generating political turbulence. (India 14 May 2014)

Outcome:

Sensex jumped from 20,000 to 25,000 as Modi's election became likely. The market peaked at 30,000 in March 2015 before falling back to 23,000 in Feb 2016.